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Posted on: 13-Sep-2007

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The final source of why Americans pay more for healthcare and get less & Series Conclusion
The final source of why Americans pay more for healthcare and get less is simply excessive regulation. The cost of regulation runs $500 million for each new drug development. This is an additional cost that Americans must pay for in the form of higher taxes and higher drug prices. Ironically, Americans give huge amounts to medical research charities and yet do not get the benefit of low pharmaceutical prices.
Then there issues of misallocation of resources that are very difficult to address. For example, around a trillion dollars each year goes to treating the more than 100 million Americans with preventable chronic illnesses that are directly related to obesity, smoking, drinking, and violence. It’s about 75% of health care costs and could likely be better spent on prevention. America’s focus on treating illnesses rather than preventing also leads to more focus on end-of-life care. More than half of medicare funds go to people in their last year of life. Ironically, this is often meted out by a system that favors heroic efforts to save lives rather than compassion. As it turns out many of these people often don’t want to be kept alive.  It has been estimated that the money saved from them alone could pay for the 42 Americans without health insurance.
However, these are very thorny issues to address. Convincing people to change to healthier lifestyles or allowing chronically ill people to just pass smacks of some futuristic sci-fi thriller. Look at the violent reactions we have as a nation to self-assisted suicide. It is doubtful that change will occur here any other way than glacially.
Another reason why it is doubtful there will be any significant change in America’s healthcare system is due to the wide distributional differences compared to other nations. At $4,600 per capita, we spend more than any other nation on health care. But a mere 5% of America’s population accounts for around 60% of the expenditures. This 5% gets average medical spending of $27,822 per person . . . per year! The other 95% only gets $976 per person.
There are two factors to consider here: 1) a relatively small percentage of the population receives significant healthcare benefits in large part because most of the population is healthy. Having little to no experience with the system, it is doubtful that this part of the population sees any issues. 2) The distribution is also heavily biased to those who can pay: the wealthy who get great health care. Thus, most people don’t care and those that do have the monetary clout to prevent significant change — especially change of the kind that would bring socialized medicine. We may have socialized police, fire services, and military, but when it is your body few people will accept a socialized system. This is why most sane politicians in America avoid the health care issue.
If you think this is a political issue unique to America, it is not the case. Despite Michael Moore’s movie “Sicko,” you can travel to any country where the health care system is paid for by taxing the population (aka a ‘single-payer-system’ or ‘socialized medicine’ depending on your political leaning) and you can find plenty of people who hate the system. For every young person that had a free baby you can find one that can’t get an MRI because they don’t have enough resources.
In all types of health systems, there are always a lack of resources because people will always demand more health care. America rations its health care with a market based system, while others ration it bureaucratically with a schedule. Either way, it is rationed. The only difference is in how the resources are distributed.
Thus it is doubtful that any major change to health care can occur realistically in America. Ironically, it is a system that virtually everyone agrees needs to change. But, at the same time everyone only wants change if it benefits them. Meanwhile it is a system so complex that change is incomprehensible, making everyone reluctant to change. In short, it is a system where Adam Smith’s invisible hand fails to work to the benefit of all. This is the sad fact of health care.
America’s aging population will drive change, as will it’s natural tendency to seek more efficient systems. But all change will be evolutionary rather than revolutionary.
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About weQuest:
weQuest's are written by G Dan Hutcheson, his career spans more than thirty years, in which he became a well-known as a visionary for helping companies make businesses out of technology. This includes hundreds of successful programs involving product development, positioning, and launch in Semiconductor, Technology, Medicine, Energy, Business, High Tech, Enviorntment, Electronics, healthcare and Business devisions.

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